Correlation Between Mazda and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Mazda and Geely Automobile at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mazda and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mazda Motor and Geely Automobile Holdings, you can compare the effects of market volatilities on Mazda and Geely Automobile and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mazda with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mazda and Geely Automobile.
Diversification Opportunities for Mazda and Geely Automobile
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mazda and Geely is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mazda Motor and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings and Mazda is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mazda Motor are associated (or correlated) with Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of Mazda i.e., Mazda and Geely Automobile go up and down completely randomly.
Pair Corralation between Mazda and Geely Automobile
Assuming the 90 days horizon Mazda Motor is expected to under-perform the Geely Automobile. In addition to that, Mazda is 1.05 times more volatile than Geely Automobile Holdings. It trades about -0.1 of its total potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.1 per unit of volatility. If you would invest 2,475 in Geely Automobile Holdings on September 3, 2024 and sell it today you would earn a total of 1,103 from holding Geely Automobile Holdings or generate 44.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.63% |
| Values | Daily Returns |
Mazda Motor vs. Geely Automobile Holdings
Performance |
| Timeline |
| Mazda Motor |
| Geely Automobile Holdings |
Mazda and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mazda and Geely Automobile
The main advantage of trading using opposite Mazda and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mazda position performs unexpectedly, Geely Automobile can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Geely Automobile will offset losses from the drop in Geely Automobile's long position.The idea behind Mazda Motor and Geely Automobile Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Geely Automobile vs. Great Wall Motor | Geely Automobile vs. Polestar Automotive Holding | Geely Automobile vs. Dowlais Group plc | Geely Automobile vs. BYD Company Limited |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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